UPS Overview March 17, 2017

March 17, 2017

Presentations may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-

looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or

anticipated results. These risks and uncertainties include, but are not limited to: general economic conditions, both in the U.S. and internationally; significant competition on a local,

regional, national, and international basis; changes in our relationships with our significant customers; existing complex and stringent regulations in the U.S. and internationally, changes

to which can impact our business; increased security requirements that may increase our costs of operations and reduce operating efficiencies; legal, regulatory or market responses to

global climate change; negotiation and ratification of labor contracts; strikes, work stoppages and slowdowns by our employees; the effects of changing prices of energy, including

gasoline, diesel and jet fuel, and interruptions in supplies of these commodities; changes in exchange rates or interest rates; our ability to maintain the image of our brand; breaches in

data security; disruptions to the Internet or our technology infrastructure; our ability to accurately forecast our future capital investment needs; exposure to changing economic, political

and social developments in international and emerging markets; changes in business strategy, government regulations, or economic or market conditions that may result in substantial

impairment of our assets; increases in our expenses or funding obligations relating to employee health, retiree health and/or pension benefits; the potential for various claims and

litigation related to labor and employment, personal injury, property damage, business practices, environmental liability and other matters; our ability to realize the anticipated benefits

from acquisitions, joint ventures or strategic alliances; our ability to manage insurance and claims expenses; and other risks discussed in our filings with the Securities and Exchange

Commission from time to time, including our Annual Report on Form 10-K for the year ended December 31, 2016, or described from time to time in our future reports filed with the

Securities and Exchange Commission. You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions

contained in such forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. We do not undertake any obligation to

update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements.

Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking

statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements.

Information included in all presentations, including comparisons to prior periods, may reflect adjusted results. See appendix for reconciliations of adjusted results and other non-GAAP

financial measures.

Forward-Looking Statements

2017 Targets (Non-GAAP)

U.S. Domestic Target 2017

Revenue 5% to 7%

Adj. Operating Profit 6% to 8%

Adj. Operating Margin Expand slightly

International Target 2017

Revenue 2% to 4%

Adj. Operating Profit -8% to -4%

Adj. Operating Margin Below LY

SC&F Target 2017

Revenue 8% to 10%

Adj. Operating Profit Down 1Q, Y/Y

Adj. Operating Margin Slightly below LY

Total Company Target 2017

Total Revenue 5% to 7%

Adj. Operating Profit ~3%

Adj. Earnings per Share 1% to 6%

Share Repurchases of $1.8B, Dividend Payout of 50% to 55% of Adj. Net Income, and ROIC* between 23% to 28%

See Appendix for reconciliation of adjusted results from prior years.

3

2018 - 2019 Targets (Non-GAAP)

U.S. Domestic Target 2018 - 2019

Revenue 4% to 6%


Adj. Operating Margin 13% to 14%

International Target 2018 - 2019

Revenue 5% to 8%



SC&F Target 2018 - 2019

Revenue 4% to 8%



Total Company Target 2018 - 2019

Total Revenue 4% to 6%


Adj. Earnings per Share 5% to 10%

Share Repurchases of $1.0B to $1.8B, Dividend Payout of 50% to 55% of Adj. Net Income, and ROIC* between 23% to 28%

See Appendix for reconciliation of adjusted results from prior years.

Strong History of Returns on Capital

10%

20%

30%

40%

23% to 28%

2011 2016 2019

Historical average greater than 20%

Ultimate Investment Allocation Flexibility

Re-invest in the business

Dividends are a priority

Maintain a strong balance sheet

Balanced approach to share repurchases

5

Reinvestment History

UPS Airline

Global Expansion

SC&F Acquisitions Facility

Automation

6 – 7%

Revenue

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

6

Annual cash dividends paid since 1969 *2008 included five dividend payments (totaling $2.22/share) due to dividend payment schedule change

**2017 is estimated based on $.83 per share first quarter announcement

$1.68$1.80 $1.80

$1.88

$2.08

$2.28

$2.48

$2.68

$2.92

$3.12

$3.32

2007 2008* 2009 2010 2011 2012 2013 2014 2015 2016 2017**

DividendsSince IPO growth averaged 10%

Stable or growing dividend for almost 50 years

8

Industry Leading Margins*

*Operating Margin is presented on an as adjusted basis for all companies (trailing 12 months) and is not reflective of the Global Small Package market.

**FDX includes TNT in FY 2Q17

4.3% 5.7%5.8%7.2%

12%

20%

29%

34%

US Global

Expected Growth (CAGR) 2016 to 2020

GDP Retail Online Retail Cross Border Online Retail (Export)

~6x

~3.5x

~1.25x

~7x

~3x

~1.25x

Online Retail is Growth Engine for FutureOnline Retail is forecast to grow 3x the rate of GDP

UPS is transforming our business model to capture this

Opportunity

Source: UPS Rates & Forecasting, eMarketer, Forrester9

B2C Mix Expected to Climb

36%

40%

44%

46%

48%

49%51%

2009 2011 2013 2015 2017 2019

Perc

en

t o

f U

.S.

Do

mesti

c P

ackag

es

Actual Forecast

B2C Shipments

projected

to continue

growing

10

Solving the B2C Equation at UPS

Revenue per

package

Cost

per stop

Packages

per stop

Value-added Solutions

Dim-weight Pricing

Peak Pricing Options

ORION

Hub Modernization

SurePost

UPS Access Point™

Synthetic Density

UPS Access Point™ Network

• “Not at Home” delivery• Enhances capacity• Improves customer service• ~8,000 in US• 26,000 globally by end of 2016

• Members re-direct delivery• Eliminates multiple attempts• Over 32M members and growing• >840M delivered

UPS MyChoice®

UPS SurePost®

Redirect

• Expanding consumer options• Growth in Large & Middle-market• 30% redirected into UPS system

11

Commercial Residential

U.S. Domestic Operating Investments

4.1%

-1%

1%

3%

5%

U.S. Average Daily Volume

DailyDelivery Stops

Package Miles Driven

4.4%

0.2%

2016

Growth

Efficiency

12

13

Bending the Cost Curve

Smart Logistics Network Benefits

ORION

Network

Planning Tool

EDGE

Facility

Automation

*Annual cost savings and avoidance

$800M to 1B*

14

The Smart Logistics Network

International Package Flow TechORION

Hub Automation/ Modernization

Network Planning Tool

EDGE

Smart Trailer

SSLAW,SurePost

Hold& Redirect

Higher Levels of Automation and Integration Than Ever Before

15

Greater Capacity

Youngest Fleet in the Industry

• Expect 3 deliveries in 2017, 14 firm by 2020, and 14 optional beyond 2020

• >16% cargo capacity compared to other fleet types

• Fleet wide dispatch reliability rating above 99%

• About 16% more efficient than 747-400s

16

ORION

Completed Phase I in 2016:• More than $400M in cost savings and avoidance• Generated NPV of more than $700M• 2.3B delivery route optimizations in one year• 210M fewer miles driven

Future:• Real-time target deployment by 2019• Dynamic functionality• $150 to $200M in annual savings

Extending Innovation Beyond the Network

17

Facilities Investment

Over 70 new package and hub projects around the world:

• Improving the efficiency and connectedness of hubs, package centers, and transportation network

• Upgrading and expanding existing facilities

• More Efficiency…More Flexibility…More Capacity

• Investments in our integrated network, benefit all packages and customers

Cost savings and avoidance:

• For every 5 percentage pts. of volume, generate about $30M

• In all, targeting between $300M to 400M annually

The World’s Most Integrated and Efficient Network…will be Even More Efficient

18

• General Rate Increase

• New DIM weight

• Large package handling surcharge

• Surge Pricing

• Residential delivery surcharge

• Weekly fuel surcharge

• Forecast Accuracy Tool

Revenue Management

Align Price

with Cost

Efficient Integrated Network

Global Package / Forwarding /

Freight / Distribution

Broad Portfolio of Capabilities

Products / Technologies

UPS Customer Solutions

Supply Chain and Industry Expertise /

Marketing / Sales

O N E U P S E X P E R I E N C E

B A L A N C E D G L O B A L P R E S E N C E

TH

OU

GH

T L

EA

DE

RS

HIP

LE

AD

IN

G B

RA

ND

19

Saturday Ground

Fastest and Widest Service on Mondays

• 6 delivery, sort and pick up days

• Pick up Saturday, Delivery Monday

• Expansion to be on rolling basis

• Reach more than 50% of U.S. by end of 2017

• Further expand in 2018

20

Asset Leverage, Technology Driven Flexibility, Unmatched Efficiency

All Service Levels, One Integrated Network

Advantage of single integrated network

UPS domestic and international packages –

all levels

DeliveryUPS Worldport®

Distribution Center

UPS ShipperUPS Feeder Package Sorting Hub UPS Airplane

Residential

Business

UPS Access PointTM

Returns

NPT Automation 747-8

NPT, EDGEORION

International Growth Strategy

• First expanded outside the U.S. more than 40 years ago

• Today we serve more than 220 countries and territories

* UPS Estimates

CREATE

OPTIMIZE

FOUNDATION

• Invested nearly $2B in our European infrastructure, about one-third complete

• $856B* opportunity within the International market that we believe will grow

• Offer customer centric solutions: UPS My Choice, UPS Access Point, and i-parcel

• Improving Europe time-in-transit by cutting one full day between 101K “city pairs”

• Entered 3PL truckload market with the acquisition of Freightex

• Expanding our dangerous goods service to 36 countries; effectively expand market opportunities

22

International Service Portfolio Expansion

Expand Industry-Leading Express Service:

• UPS Express provides broadest time-of-day coverage in the market

• UPS Express Saver provides global coverage to almost anywhere in 20 to 48 hours

• In 2016:

• Added Early A.M. Express Plus to 26 new countries

• Added Express to 52 new countries

• In 2017, bringing Express and Express Plus to 37 new countries

• Also, expanding “dangerous goods” service to 36 new countries

23

10%

15%

20%

25%

20162013

International Operating Margins

16 -19%

200-300bps

Impact*

See Appendix for reconciliation of adjusted results.

*Impact due to currency hedges24

400

600

800

1,000

1,200

1,400

4Q06 3Q07 2Q08 1Q09 4Q09 3Q10 2Q11 1Q12 1Q13 4Q13 3Q14 2Q15 1Q16 4Q16

International Export Volume Trends

Source: Company quarterly reports Note: FedEx in fiscal quarters

UPS’ 10 Year CAGR = +6.0%

FedEx’s 10 Year CAGR = +1.8%

Avera

ge D

aily

Volu

me

25

UPS My Choice® & UPS Access PointTM

UPS My Choice® service

UPS Access Point™ locations

UPS My Choice® service:32 Million Members & Growing

“Follow My Delivery” introduced in the U.S.

UPS Access Point™ Expansion:26,000 locations globally

ChoiceConvenience

Control

26

Supply Chain & Freight – Growing Opportunities

Ocean Brokerage

Air Freight

Supply Chain Finance

Insurance Distribution

Freight Coyote

27

55 dedicated facilities globally… and growing

Global Healthcare Integrated Distribution Network

• GDP & GMP compliance*

• Temperature control storage &

packaging

• Integrated Transportation services

including Temperature Controlled Air

and Ground

• Labelling and kitting

• Order to cash services including

charge-back processing

• Pharmacy operations

• Single integrated global platform

• Implantable Device Inventory

Management and Loaner Kit

management

Over 7 million square feet

Current UPS Facilities UPS Air Hub

UPS Acquires Marken

• Expanding existing UPS capabilities and coverage, especially in emerging markets

• Expect to be accretive year 1

• High margin business

• #1 Inbound Market Leader

• 43 Global Facilities

• Serving >150 countries

• 140 Vehicles

• 650 Employees

Makes UPS the World’s Largest Clinical Trials Integrated Carrier

Expanding Global Clinical Trials Capability

Acquisitions & Strategic Partnerships since 2014

Appendix

I. Latest Results

II. Additional Information

III. Financial Reconciliations

IV. Glossary

31

• 4Q16:

US Domestic 4Q Revenue Climbs 6.3%, Driven by Ecommerce

Int’l Export Shipments Soar 8.4%, Led by Asia and Europe Regions

4Q EPS of -$0.27, due to Mark-to-Market Pension Charge

Adjusted 4Q EPS of $1.63, Driven by International Segment

2016 EPS of $3.87; Adjusted 2016 EPS of $5.75

Consolidated Results

(In millions, except EPS) 4Q16 4Q15 $ Change % Change

Revenue $16,931 $16,054 $877 5.5%

Adj. Operating Expenses* $14,708 $13,885 $823 5.9%

Adj. Operating Profit* $2,223 $2,169 $54 2.5%

Adj. Net Income* $1,434 $1,410 $24 1.7%

Adj. Diluted EPS* $1.63 $1.57 $0.06 3.8%

32

33

UPS Alternative Fuel / Advanced Technology Fleet

International Total: 1,432*• Propane: 1,130• Electric: 135• CNG: 76• Ethanol: 62• Biomethane: 19• Hybrid Electric: 10

U.S. Total: 6,670*• CNG: 3,074• LNG: 1,355• Propane: 1,176• Hybrid Electric: 454• Composite: 398• Electric: 122• HHV: 91

*As of 12/31/2016

Total Worldwide: 7,750*

UPS Global Snapshot

434,000 employees

Domestic & International

• 19.1 million packages & documents/day

• 220+ countries and territories; every address in North America and Europe

• More than 108,000 delivery vehicles

• 543 total aircraft

• 237 UPS aircraft

• 306 chartered aircraft

• Over 10 million daily customers (1.6 million pick-up, 8.7 million delivery)

Supply Chain & Freight

• More than 500 facilities in more than 115 countries / 36.6 million square feet

• 55 dedicated Healthcare facilities / Over 7 million square feet

UPS Pressroom Fact Sheet – Jan 201734

EUROPE APAC AMERICAS

Employees 45,000 14,400 19,500

Delivery Fleet 14,000 1,880 3,320

Operating Facilities 400 450 360

UPS Points of Access 16,000 3,500 2,500

Flight Segments

Intra-Region

Intercontinental

166 Daily

141 Daily

194 Weekly

143 Weekly

190 Daily

40 Daily

*Excludes ISMEA Region Source: UPS Pressroom Fact Sheets

UPS International Regional Statistics

35

Reconciliation of GAAP and non-GAAP Financial Measures

We supplement the reporting of our financial information determined under generally accepted accounting principles ("GAAP") with certain non-GAAP financial performance measures, including, as applicable, "as adjusted" cost-per-piece, operating expenses, operating profit, operating margin, pre-tax income, net income, earnings per share and Return on Invested Capital (“ROIC”). The equivalent measures determined in accordance with GAAP are also referred to as "reported" or "unadjusted.” Additionally, we disclose currency-neutral revenue and adjusted cash flows from operations.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results and assessing our ongoing performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions. We also use certain of these measures for the determination of incentive compensation award results.

Non-GAAP financial performance measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.

Outlook

The company provides guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension mark-to-market adjustments, which would be included in reported (GAAP) results and could be material.

Mark-To-Market Pension and Post-Retirement Adjustments

We recognize changes in the fair value of plan assets and net actuarial gains and losses in excess of a 10% corridor for company-sponsored pension and post-retirement liabilities immediately as part of net periodic benefit cost. We supplement the presentation of our reported performance measures with similar non-GAAP performance measures that exclude the impact of the portion of net periodic benefit cost represented by the gains and losses recognized in excess of the 10% corridor and the related income tax effects.

This adjusted net periodic benefit cost is comparable to the accounting for our defined benefit plans in our quarterly reporting under U.S. GAAP, and reflects assumptions utilizing the expected return on plan assets and the discount rate used for determining net periodic benefit cost (the non-adjusted net periodic benefit cost reflects the actual return on plan assets and the discount rate used for measuring the projected benefit obligation). We believe this adjusted net periodic benefit cost provides important supplemental information that reflects the anticipated long-term cost of our defined benefit plans, and provides a benchmark for historical defined benefit cost trends that may provide useful comparison of year-to-year financial performance without considering the short-term impact of changes in market interest rates, equity prices, and similar factors.

The deferred income tax effects of these mark-to-market pension and postretirement adjustments are calculated by multiplying the statutory tax rates applicable in each tax jurisdiction, including the U.S. federal jurisdiction and various U.S. state and non-U.S. jurisdictions, by the adjustments. 36

(Continued)

Health and Welfare Plan Changes

In connection with the ratification of our national master agreement with the International Brotherhood of Teamsters in 2014, we incurred pre-tax charges associated with changes in the delivery of healthcare benefits to certain active and retired union employees. We believe adjusting our reported performance measures for these charges provides important supplemental information that is reflective of long-term trends and that may provide useful comparison of year-to-year financial performance without considering the short-term impact of one-time health and welfare plan charges.

TNT Express Termination Fee and Related Gain on Liquidation on Foreign Subsidiary

During 2013, we terminated our agreement to purchase TNT Express. In connection our plan to integrate TNT Express upon acquisition, we liquidated a foreign subsidiary resulting a one-time gain. We believe adjusting our reported performance measures for these transactions provides important supplemental information as they are not reflective of our long-term trends and that excluding them provides a useful comparison of year-to-year financial performance.

Multi-employer Pension Plan (“MEPP”) Changes

In connection with our withdrawal from certain MEPPs during 2012, we incurred pre-tax charges associated with our portion of the plans’ liabilities upon exit. We believe adjusting our reported performance measures for these charges provides important supplemental information that is reflective of long-term trends and that may provide useful comparison of year-to-year financial performance without considering the short-term impact of one-time MEPP charges.

Gain on Real Estate Transaction

During 2011, we recorded a gain as a result of selling certain of our real-estate assets. These gains are not indicative our on-going business operations. We believe adjusting our reported performance measures for these gains provides important supplemental information as these transactions are not reflective of our long-term trends and that excluding them provides a useful comparison of year-to-year financial performance.

Teamsters Arbitration Ruling

During 2000, the 1997 Teamsters contract arbitration ruling resulted in a charge to the U.S. Domestic Small Package segment. We believe adjusting our reported performance measures for this charge provides important supplemental information that is reflective of long-term trends and that may provide useful comparison of year-to-year financial performance without considering the short-term impact of charges resulting from a one-time ruling.

37

(Continued)

Currency-Neutral Revenue

We supplement the reporting of our revenue with similar non-GAAP measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of our International Package business on a currency-neutral basis.

Currency-neutral revenue is calculated by multiplying prior period reported U.S. dollar revenue by the prior period average exchange rates to derive prior period local currency revenue. The derived prior period local currency revenue is then divided by the average foreign currency exchange rates used to translate the company's financial statements in the comparable current year. The difference between the prior period reported U.S. dollar revenue and the derived prior period U.S. dollar revenue (including the impact of current period foreign currency hedging activities) is added to the current period reported U.S. dollar revenue to derive current period currency-neutral U.S. dollar revenue.

Adjusted Cash Flows from Operations

We supplement the reporting of our planned cash flows from operating activities with adjusted cash flows from operations, a non-GAAP liquidity measure. We believe this metric is an important indicator of how much cash will be generated by regular business operations and we use will use it as a measure of incremental cash available to invest in our business, meet our debt obligations and return cash to shareowners. We calculate adjusted cash flows from operations as cash flows from operating activities less discretionary pension contributions

38

U.S. Domestic Cost Per Piece Reconciliation

39

Currency Neutral Revenue Reconciliation

2016 2014 % Change Currency 2016* % CAGR

(amounts in millions)

Revenue:

U.S. Domestic Package 38,301$ 35,851$ 6.8% - 38,301$ 3.4%

International Package 12,350 12,988 -4.9% 1,018 13,368 1.5%

Supply Chain & Freight 10,255 9,393 9.2% 305 10,560 6.0%

Total revenue 60,906$ 58,232$ 4.6% 1,323$ 62,229$ 3.4%

* Amounts adjusted reflect impacts for currency exchange rate differences.

Twelve Months Ended Currency

NeutralDecember 31

Currency Neutral Revenue

40

Small Package Operating Margin Reconciliation

2013 2014 2015 2016


U.S. Domestic Package GAAP 4,603$ 2,859$ 4,767$ 3,017$

Defined Benefit Plans Mark-to-Market Charge - 660 62 1,908

Transfer healthcare coverage to MEP - 990 - -

U.S. Domestic Package Adjusted 4,603$ 4,509$ 4,829$ 4,925$

International Package GAAP 1,757$ 1,677$ 2,137$ 2,044$

Defined Benefit Plans Mark-to-Market Charge - 200 44 425

Transfer healthcare coverage to MEP - 28 - -

TNT Termination Fee and Related Expenses 284 - - -

Gain Upon Liquidation of Foreign Subsidiary (245) - - -

International Package Adjusted 1,796$ 1,905$ 2,181$ 2,469$

GAAP Small Package Operating Profit 6,360$ 4,536$ 6,904$ 5,061$

Adjusted Small Package Operating Profit 6,399$ 6,414$ 7,010$ 7,394$

Revenue

U.S. Domestic Package 34,074$ 35,851$ 36,747$ 38,301$

International Package 12,429 12,988 12,149 12,350

Total Small Package 46,503$ 48,839$ 48,896$ 50,651$

GAAP U.S Domestic Package Operating Margin 13.5% 8.0% 13.0% 7.9%

GAAP International Package Operating Margin 14.1% 12.9% 17.6% 16.6%

GAAP Small Package Operating Margin 13.7% 9.3% 14.1% 10.0%

Adjusted U.S Domestic Package Operating Margin 13.5% 12.6% 13.1% 12.9%

Adjusted International Package Operating Margin 14.5% 14.7% 18.0% 20.0%

Adjusted Small Package Operating Margin 13.8% 13.1% 14.3% 14.6%

Small Package

Operating Margin

41

Historical Operating Margin Reconcilliation

2011 2012 2013 2014 2015 2016


U.S. Domestic Package GAAP Operating Profit 3,764$ 459$ 4,603$ 2,859$ 4,767$ 3,017$

Defined Benefit Plans Mark-to-Market Charge 479 3,177 - 660 62 1,908

Transfer healthcare coverage to MEP - - - 990 - -

Multiemployer Pension Plan Withdrawal Charge - 896 - - - -

(Gain) or Loss on Real Estate Sale 15 - - - - -

U.S. Domestic Package Adjusted Operating Profit 4,258$ 4,532$ 4,603$ 4,509$ 4,829$ 4,925$

International Package GAAP Operating Profit 1,709$ 869$ 1,757$ 1,677$ 2,137$ 2,044$

Defined Benefit Plans Mark-to-Market Charge 171 941 - 200 44 425

Transfer healthcare coverage to MEP - - - 28 - -

TNT Termination Fee and Related Expenses - - 284 - - -

Gain Upon Liquidation of Foreign Subsidiary - - (245) - - -

International Package Adjusted Operating Profit 1,880$ 1,810$ 1,796$ 1,905$ 2,181$ 2,469$

Supply Chain & Freight GAAP Operating Profit 607$ 15$ 674$ 432$ 764$ 406$

Defined Benefit Plans Mark-to-Market Charge 177 713 - 202 12 318

Transfer healthcare coverage to MEP (48) - - 84 - -

Supply Chain & Freight Adjusted Operating Profit 736$ 728$ 674$ 718$ 776$ 724$

Total GAAP Operating Profit 6,080$ 1,343$ 7,034$ 4,968$ 7,668$ 5,467$

Total Adjusted Operating Profit 6,874$ 7,070$ 7,073$ 7,132$ 7,786$ 8,118$

Revenue

U.S. Domestic Package 31,717$ 32,856$ 34,074$ 35,851$ 36,747$ 38,301$

International Package 12,249 12,124 12,429 12,988 12,149 12,350

Supply Chain & Freight 9,139 9,147 8,935 9,393 9,467 10,255

Total Revenue 53,105$ 54,127$ 55,438$ 58,232$ 58,363$ 60,906$

GAAP U.S Domestic Package Operating Margin 11.9% 1.4% 13.5% 8.0% 13.0% 7.9%

GAAP International Package Operating Margin 14.0% 7.2% 14.1% 12.9% 17.6% 16.6%

GAAP Supply Chain & Freight Operating Margin 6.6% 0.2% 7.5% 4.6% 8.1% 4.0%

GAAP Total Operating Margin 11.4% 2.5% 12.7% 8.5% 13.1% 9.0%

Adjusted U.S Domestic Package Operating Margin 13.4% 13.8% 13.5% 12.6% 13.1% 12.9%

Adjusted International Package Operating Margin 15.3% 14.9% 14.5% 14.7% 18.0% 20.0%

Adjusted Supply Chain & Freight Operating Margin 8.1% 8.0% 7.5% 7.6% 8.2% 7.1%

Adjusted Total Operating Margin 12.9% 13.1% 12.8% 12.2% 13.3% 13.3%

Segment Operating Margins

42

Adjusted Net Income and EPS Reconciliation

(amounts in millions, except per share amounts) 2014 2015 2016 2015 & 2016

% Increase 2014

to 2016

% CAGR

2014 to 2016

GAAP Net Income 3,032$ 4,844$ 3,431$ 8,275$ 13.2% 6.4%

GAAP Diluted Earnings Per Share 3.28$ 5.35$ 3.87$ 18.0% 8.6%

Operating Expenses:

Transfer healthcare coverage to MEP 1,102$ -$ -$ -$

Pension Mark to Market 1,062 118 2,651 2,769

Total Adjustments to Operating Expenses: 2,164$ 118$ 2,651$ 2,769$

Tax-Effect of Above Items (807) (39) (978) (1,017)

Total Adjustments to Net Income 1,357$ 79$ 1,673$ 1,752$

Adjusted Net Income 4,389$ 4,923$ 5,104$ 10,027$ 16.3% 7.8%

Divided By: Diluted WAVG Shares Outstanding 924 906 887

Adjusted Diluted Earnings Per Share 4.75$ 5.43$ 5.75$ 21.1% 10.0%

Shareholder Distributions

Dividends 2,487$ 2,649$ 2,771$ 5,420$

Share Repurchases 2,662 2,711 2,706 5,417

Total 5,149$ 5,360$ 5,477$ 10,837$

% Adjusted Net Income - Dividends 57% 54% 54% 54%

% Adjusted Net Income - Share Repurchases 61% 55% 53% 54%

% Adjusted Net Income Returned to Shareholders 118% 109% 107% 108%

Earnings per Share and Shareholder Distribution Trends

43

ROIC Reconciliation


2011 -

Adjusted

2011 -

GAAP

2012 -

Adjusted

2012 -

GAAP

2013 -

Adjusted

2013 -

GAAP

2014 -

Adjusted

2014 -

GAAP

2015 -

Adjusted

2015 -

GAAP

2016 -

Adjusted

2016 -

GAAP

Operating Profit 6,874 6,080 7,070 1,343 7,073 7,034 7,132 4,968 7,786 7,668 8,118 5,467

Less: Taxes (2,365) (2,073) (2,439) (230) (2,504) (2,427) (2,532) (1,719) (2,647) (2,607) (2,801) (1,815)

After-Tax Op Profit 4,509 4,007 4,631 1,113 4,569 4,607 4,600 3,249 5,139 5,061 5,317 3,652

Beginning LT Debt 10,491 10,491 11,095 11,095 11,089 11,089 10,824 10,824 9,856 9,856 11,316 11,316

Ending LT Debt 11,095 11,095 11,089 11,089 10,824 10,824 9,856 9,856 11,316 11,316 12,394 12,394

Beginning Shareowners' Equity 10,387 8,047 9,853 7,108 7,941 4,733 6,566 6,488 5,356 2,158 5,200 2,491

Ending Shareowners' Equity 9,853 7,108 7,941 4,733 6,566 6,488 5,356 2,158 5,200 2,491 3,850 429

Average Invested Capital 20,913 18,371 19,989 17,013 18,210 16,567 16,301 14,663 15,864 12,911 16,380 13,315

Return on Invested Capital 21.6% 21.8% 23.2% 6.5% 25.1% 27.8% 28.2% 22.2% 32.4% 39.2% 32.5% 27.4%

Beginning Total Debt 10,846 10,846 11,128 11,128 11,120 11,120 10,872 10,872 10,787 10,787 14,334 14,334

Ending Total Debt 11,128 11,128 11,120 * 11,120 * 10,872 10,872 10,787 10,787 14,334 14,334 16,075 16,075

Beginning Shareowners' Equity 10,387 8,047 9,853 7,108 7,941 4,733 6,566 6,488 5,356 2,158 5,200 2,491

Ending Shareowners' Equity 9,853 7,108 7,941 4,733 6,566 6,488 5,356 2,158 5,200 2,491 3,850 429

Average Invested Capital 21,107 18,565 20,021 17,045 18,250 16,607 16,791 15,153 17,839 14,885 19,730 16,665

Return on Invested Capital 21.4% 21.6% 23.1% 6.5% 25.0% 27.7% 27.4% 21.4% 28.8% 34.0% 27.0% 21.9%

*2012 total debt adjusted to reflect 1/15/13 debt repayment of $1.75B

Shareowners Equity Adjustments:

2011 beginning balance adjusted $2.340 billion for unrecognized pension and postretirement benefits costs, net of tax

2011 ending balance adjusted $2.745 billion for unrecognized pension and postretirement benefits costs, net of tax


2013 ending balance adjusted $78 million for TNT and unrecognized pension and postretirement benefits costs, net of tax




ROIC

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Glossary

Definition Definition Definition

ABC Activity Based Costing EDGEEnhanced Dynamic Global Execution

LTL Less-Than-Truckload

ADV Average Daily Volume EMEAEurope, Middle East, and Africa

MTM Mark-To-Market pension revaluation

B2B Business To Business retail channel EPS Earnings Per Share NPT Network Planning Tools

B2CBusiness To Consumer retail channel

FSC Fuel Surcharge ORIONOn-Road Integrated Optimization and Navigation

B2RBusiness To Retail store distribution channel

GDP Gross Domestic Product ROIC Return On Invested Capital

Blockhours

Aircraft hours IAF International Air Freight SC&F Supply Chain and Freight segment

CAGR Compound Annual Growth Rate IP Industrial Production TTM Trailing Twelve Months

DIADDelivery Information Acquisition Device

IPO Initial Public Offering

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UPS Overview March 17, 2017

Investor Relations

Transcript of UPS Overview March 17, 2017